Navigating Work Suspension Rights for Claimants under Victoria’s Security of Payment Act

Key Circumstances:

In Victoria there are three key circumstances that empower claimants to exercise their statutory entitlement to suspend work:

1. Non-Payment Despite Valid Payment Schedule: Claimants gain the right to suspend work when they receive a valid payment schedule, but the respondent fails to pay the scheduled amount by the due date.
2. Late or No Payment Schedule: If a payment schedule is not served within the required timeframe, and the respondent neglects to pay the full claimed amount by the due date, the claimant is entitled to suspend work.
3. Non-Payment of Adjudicated Amount: Should the adjudicated amount remain unpaid within 5 business days of the respondent receiving the adjudication determination, or a later date determined by the adjudicator, the claimant can lawfully suspend work.

Important Considerations:

• The claimant bears no liability for any loss or expense suffered by the respondent due to the suspension, regardless of contractual terms.
• If the respondent removes work from the claimant’s contract in response to the suspension, they are accountable for any resulting loss and expense suffered by the claimant.

The Suspension Process:

To suspend work under the SOP Act, claimants must follow a structured process:

1. Notice: The claimant must give notice to the respondent of their intention to suspend work.
2. Conferral of Right: The claimant is entitled to give notice only if certain events occur, such as non-payment, late payment, or failure to pay an adjudicated amount.
3. Waiting Period: After giving notice, the claimant must wait for at least 3 business days before actually suspending the work.
4. Period of Suspension: The suspension lasts until the claimant receives payment from the respondent, as specified in the construction contract or within 3 business days, whichever is applicable.

Notice Requirement:

• A crucial step in the process is providing the respondent with 3 business days written notice before suspending work.
• For instance, if the due date for payment is on Monday and the notice is given on Tuesday, work may be suspended starting from that Friday.

Sample Notice Format: “You have failed to pay the amount due under the Victoria Building and Construction Industry Security of Payment Act 2002 in respect of my payment claim served on you on [insert date]. Take notice that pursuant to my right under section 29 of the Act, I will suspend work at the expiration of three business days unless, in the meantime, the amount due is paid in full.”

Resumption of Work:

• Once the claimant receives the amount due, work must resume within 3 business days or within a period specified by the contract, if longer than 1 business day.

Section 29 of the SOP Act:

Section 29 provides a strategic mechanism for claimants to safeguard their interests, offering protection from contractual breaches and ensuring fair compensation for incurred losses or expenses during the suspension of work.

1. Notice and Timing (Subsection 1):
   1. Claimants are empowered to suspend construction work or the supply of related goods and services if at least three business days have passed since the claimant issued a notice of intention to do so.
2. Duration of Suspension (Subsection 2):
   1. The right to suspend persists until certain conditions are met. If the construction contract outlines a return-to-work period of at least one business day post-receipt of payment, the suspension lasts until the end of that period. In other cases, it extends until three business days after receiving payment for amounts specified in sections 16(1), 17(1), 28M, or 28N.
3. No Breach of Contract (Subsection 3):
   1. It’s crucial to note that the suspension in accordance with Section 29 does not constitute a breach of the construction contract by the claimant. This provision shields claimants from contractual repercussions for utilizing their right to suspend work.
4. Compensation for Loss or Expenses (Subsection 4):
   1. Should the claimant incur losses or expenses due to the removal of any part of the work or supply by the respondent during the suspension, the respondent is obligated to compensate the claimant for such losses or expenses.
5. Limited Liability During Suspension (Subsection 5):
   1. Importantly, a claimant who suspends construction work or the supply of goods and services as per Section 29 is not liable for any loss or damage suffered by the respondent or any person claiming through the respondent during the suspension period.

Understanding and exercising these rights empower claimants to effectively navigate payment disputes under Victoria’s Security of Payment Act.